Masonry Magazine June 1987 Page. 16
General contractors also have been using disclaimer clauses in their subcontract agreements to deny their responsibility to coordinate the work of the subcontractors and to construct the project in accordance with the schedule. They also frequently state in their subcontract agreements that any dispute will be interpreted in favor of the general contractor. These disclaimers, whether they be by owners or contractors, are major sources of construction claims.
The number of man-hours required to do the work on a project has increased. When estimating a project, the contractor cannot include many contingencies and still get the job. Therefore, any mistake in the estimate or in anticipating the duration of the project will cost the mason contractor money. It is not uncommon for mason contracts or subcontracts to exceed millions of dollars. The risk increases substantially when a contract is awarded to multiple prime contractors.
The time allowed for construction is frequently too optimistic. Due to the short period of construction, any delays or unanticipated conditions may force a contractor to accelerate his performance, thereby increasing his direct labor costs on the project.
Mason contractors are becoming more aware of claims avoidance and preparation, and are no longer allowing the general contractors to solely direct scheduling, and performance of work.
How can the mason contractor minimize the chances of becoming involved in claims?
There is no way to guarantee that you can avoid all construction claims. But you can minimize the chances by being prepared for a claim if it should occur.
Start by understanding the rights and remedies within the contract documents. Read the contract carefully to understand the risks associated with the project. Contractors are frequently concerned only with the technical portion of the specifications and the quantity take-off which they use to price the job. But it is just as important to read the general and special conditions of the contract before bidding the project. Since all construction is based on the contract documents, these conditions may indicate items which will have an adverse effect on your work. You may not want to bid a job if the general and special conditions impose harsh restrictions on the work. By not bidding, you will save time which can be better spent on other business or in bidding more favorable jobs.
Secondly, always know the status of each project by checking the anticipated progress and productivity estimated against the actual progress. The measuring stick for progress is the project schedule which may be related to the amount of payment you are able to request. Update this schedule at least bi-weekly, and analyze any variations. Note the actual work performed, since the actual performance will normally differ from the planned rate. Without knowing what was planned, you will not know what factors have increased the cost of completing the work.
Educate personnel about events which lead to claims. Be certain they know the avenues available for claims resolution. Send your key people to seminars, or arrange for a seminar to be specifically presented for our company. With an in-house seminar, the people who are actually on the project site can attend and will be better prepared to keep you up to date on events which may lead to future claims.
About the Author
John C. van Dyk is president of van Dyk Construction Consultants Corporation, a construction claims and project management firm headquartered in Dayton, Ohio. A registered Professional Engineer with a background in engineering and project design and management, van Dyk serves as an arbitrator on construction-related disputes for the construction industry panel of the American Arbitration Association. John conducted a seminar of Construction Claims at the 1987 MCAA Conference in Dallas which was well received by the membership. The firm is located at 1612 Proser Avenue, Suite 215, Dayton, OH 45409. (513) 299-2232.
How should you proceed when no requirements for a schedule are included in the contract?
If no scheduling is required in the contract, determine if the complexity of the job warrants a contractor-initiated schedule. There are two basic types of schedules used in construction: the bar chart and the critical path method. The prime difference between the two is that a bar chart does not show a detailed inter-relationship of events which must be performed during the construction process. A critical path method schedule and the relationship which each event has with another event, and shows which events must be initiated or completed prior to the commencement of a subsequent event. Use the project schedule to demonstrate the impact of changes or delays, or lack or performance.
How do you use documentation to minimize exposure to claims?
Establish a job tracking system by using the bidding documents and the quantity take-off or estimate you prepared when you bid the job. Save all information used, including material quotations. subcontractor quotes, estimate sheets, extensions, preliminary schedules, equipment to be used, and any other information, even if it was written on a napkin. If you are not awarded the contract, you may dispose of the information. However, if you receive the contract award, this documentation will become an invaluable record if you are required to file a claim.